Rail fare prices - the basis of increases (merged ongoing discussion)

[whole diary]

[ChrisB]

Exactly. Abolishing the restriction raises more money from the farebox, which it wouldn't do if the ATOC^» (Association of Train Operating Companies See - here) statement was true. So for franchises currently on a cap and collar arrangement, the government will need to give less support.

Yes, that is the stated aim of this Government. And was the previous Governments stated aim too.

Maybe you misunderstood, I'm wondering how much extra revenue (ie. ^s) would be generated, not the percentage.

I'm sure last yrear's farebox info is somewhere in the reams of figures put out by various bodies (ORR^» (Office of Rail and Road formerly Office of Rail Regulation - about) maybe?), but I don't know precisely where.

My own calculations were rather un-informed and I came up with either ^43,200,000 or ^115,200,000, BIG difference there! I ask this because I'm wondering if there's a way that amount can be saved without pricing passengers off Britain's railway, I have an idea but I expect the goverment won't listen unless it generates at least as much as the fare hike would. We can NOT afford to wait a few years to get modal shift to rail, according to what I've read global greenhouse emmisions MUST START TO FALL BY 2015.

The stated aim is for the passdengers to pay more of the running costs, so unless your idea is related to that, I agree, they won't listen.
Emissions will fall, because a load of coal-fired power stations are being decommissioned by that date.

[Rhydgaled]

The stated aim is for the passdengers to pay more of the running costs, so unless your idea is related to that, I agree, they won't listen.

My idea is to massively reduce the running costs, by completly eliminating at least one unecessary element of said costs (the ROSCOs^» (Rolling Stock Owning Company - about), and later perhaps total nationalisation). Therefore passengers would pay the same amount as they do now but the government wouldn't have to fork out so much money, ie. raising the percentage which is covered by passengers without increasing the fares they pay. However without knowing how much money the fare rise would bring in I can't say if the massive reduction in running costs would save the government enough cash to avoid them also having to raise fares.

[ChrisB]

My idea is to massively reduce the running costs, by completly eliminating at least one unecessary element of said costs (the ROSCOs^» (Rolling Stock Owning Company - about), and later perhaps total nationalisation).

Hmmm - did you know that the ROSCOEs actually run on a commercial basis and cost the Government nothing to run? If you abolished them, who looks after the stock? And orders more? And who pays for that? Currently TOCs^▸ (Train Operating Company) pay a hire fee to the ROSCOEs for their stock.

Nationalisation costs more than what we've got currently....

Therefore passengers would pay the same amount as they do now but the government wouldn't have to fork out so much money, ie. raising the percentage which is covered by passengers without increasing the fares they pay.

Sorry, explain please? What you have written doesn't add up....

However without knowing how much money the fare rise would bring in I can't say if the massive reduction in running costs

Eh? You've suggested two things that would actually cost more to run the railways!

[Rhydgaled]

My idea is to massively reduce the running costs, by completly eliminating at least one unecessary element of said costs (the ROSCOs^» (Rolling Stock Owning Company - about), and later perhaps total nationalisation).

Hmmm - did you know that the ROSCOEs actually run on a commercial basis and cost the Government nothing to run? If you abolished them, who looks after the stock? And orders more? And who pays for that? Currently TOCs^▸ (Train Operating Company) pay a hire fee to the ROSCOEs for their stock.

Nationalisation costs more than what we've got currently....

Sorry, I thought it would be obvious. I'll start with the ROSCOs, full re-nationalisation would have to wait until the current franchises expire anyway. Yes, the ROSCOs receive no direct payments from the Government, and maybe retaining them as maintenance contractors would work out better than nationalising maintenance. HOWEVER, while the Government do not pay the ROSCOs directly, the TOCs are forced to pay leasing fees to the ROSCOs, this adds to the running costs of the TOC, for no good reason.

As far as I know leasing a single-car class 153 unit for a year costs ^100,000 (maintenance is extra by the way). I don't have any other figures but assuming all units in the sprinter family (150, 153, 155, 156, 158 and 159) cost that amount per-car leasing the entire fleet (1,035 carriages) collectively costs the TOCs ^103,500,000 per year. It is probablly safe to assume the other classes cost more than 153s, so this figure is a little on the small size, and that's just the sprinters. Train leasing is an additional running cost for the TOCs, if they didn't need to pay these fees they would need lower subsidies from the government or would otherwise be able to absorb at least some of the proposed fare rises.

Nationalisation of the TOCs themselves as their franchises run out could also be a good idea. Even the companies that have franchises which cost more to run than they bring in through farebox revenue have to make a profit or they wouldn't be doing it, therefore not all the government subsidy is going to pay for the train services, some is going into lining the pockets of corporation's shareholders (I guess having private money to pay for track and train maintenance might justify this, but there still is no benifit to be had by having ROSCOs).

[ChrisB]

Someone has to finance the purchase of rolling stock. Currently, the ROSCOEs do this (using Government guarantees but no cash), hence the lease payments from the TOCs^▸ (Train Operating Company) repaying the loans that the ROSCOEs take out.

Nationalising the ROSCOEs means that the DfT^» (Department for Transport - about) has to finance the rolling stock - how, currently, do you suggest that they do this?

Lastly, all recent Governments have accepted that franchising is a cheaper all-round way of running the railways, otherwise they would nationalise, surely - especially Labour. I think they probably have a better handle on national finances than you, possibly?

[inspector_blakey]

but there still is no benifit to be had by having ROSCOs^» (Rolling Stock Owning Company - about)

Debatable at best, simplistic at worst. Playing devil's advocate, just for starters the ROSCOs are backed by major banks which gives them serious purchasing power, and means that they can buy new trains up front which are then paid for by the TOCs^▸ (Train Operating Company) in the long term through leasing charges. The fact that this doesn't always happen isn't really the fault of the ROSCOs per se, but more of the convoluted system in which they have to operate.

The idea that the whole system should be renationalized and that will solve all problems is fantastically naive - do you remember British Rail and the utopian world of low fares, tidy stations, new stock, polite staff and fast, frequent trains? No, neither do I. It was, bluntly, a national joke. The European countries that are often quoted as good examples of nationalized rail services (e.g. France, Switzerland, Germany even though DB^» (Deutsche Bahn - German State Railway - about) is engaged in all sorts of political and structural machinations that are leading to creeping part-privatization) aren't good because they're nationalized, they're good because government policy in those countries is to pour in large sums of subsidy and accept that railways are a public service rather the a profit-making enterprise. Many of the tickets you can buy on those systems simply don't cover the cost of your journey, and the government picks up the tab. End of.

[SDS]

Any anyway arnt some of the ROSCOS now owned by the government anyway (via the banks)

Porterbrook - part owned by Lloyds (part owned by HMG).
Alpha Trains (Angel Trains) - owned by RBS (owned by HMG).

[JayMac]

Lloyds exited from the consortium owning Porterbrook on 15th October 2010.

http://www.porterbrook.com/pages/shareholders.html

Angel Trains sold by RBS in 2008 to a consortium advised by Babcock & Brown.

http://www.angeltrains.co.uk/corporate/shareholder.aspx

Alpha Trains has nothing to do with UK^▸ (United Kingdom) rolling stock.

[bemmy]

Someone has to finance the purchase of rolling stock. Currently, the ROSCOEs do this (using Government guarantees but no cash), hence the lease payments from the TOCs^▸ (Train Operating Company) repaying the loans that the ROSCOEs take out.

Nationalising the ROSCOEs means that the DfT^» (Department for Transport - about) has to finance the rolling stock - how, currently, do you suggest that they do this?

Why can't the TOC's buy the rolling stock? They are all substantial enterprises with plenty of capital behind them, surely the only reason they don't buy trains is because the franchises are too short. I think Rhydgaled's proposal is pretty sound in principle -- if you could take out the substantial profit element enjoyed by the ROSCO^» (Rolling Stock Owning Company - about)'s, the savings could be used for the benefit of the railways.

Lastly, all recent Governments have accepted that franchising is a cheaper all-round way of running the railways, otherwise they would nationalise, surely - especially Labour. I think they probably have a better handle on national finances than you, possibly?

Although no-one has ever been able to give me ONE example where privatisation has improved a public service, it has been a consistent mantra for every government since 1979. In my view, the only possible reason for that is corruption -- the gravy train that starts with the promise of the magic wand of the market making everything better, and ends with former government ministers getting lucrative non-executive directorships on the boards of the companies they gave the contracts to when they were in power. So let's bin our rose-tinted spectacles and stop thinking that governments behave as they do because they know best and have the nation's best interests at heart.

[bemmy]

The idea that the whole system should be renationalized and that will solve all problems is fantastically naive - do you remember British Rail and the utopian world of low fares, tidy stations, new stock, polite staff and fast, frequent trains? No, neither do I. It was, bluntly, a national joke. The European countries that are often quoted as good examples of nationalized rail services (e.g. France, Switzerland, Germany even though DB^» (Deutsche Bahn - German State Railway - about) is engaged in all sorts of political and structural machinations that are leading to creeping part-privatization) aren't good because they're nationalized, they're good because government policy in those countries is to pour in large sums of subsidy and accept that railways are a public service rather the a profit-making enterprise. Many of the tickets you can buy on those systems simply don't cover the cost of your journey, and the government picks up the tab. End of.

Don't you think that the rest of Europe might possibly be correct in thinking that transport infrastructure is vital to the long-term economic situation of a nation? That's why they subsidise it, not because they are more stupid than us.

I do agree that nationalisation won't in itself solve the railways' problems -- because our governments will probably continue to ensure that whatever system we have is designed as far as possible to starve them of investment. Privatisation didn't change that and nor would re-nationalisation. However it was better in British Rail days.... trains were faster, more punctual, more comfortable, didn't break down so often, and fares were much lower in real terms. The only improvement that I've noticed since 1995 has been in frequency.

[ChrisB]

Don't you think that the rest of Europe might possibly be correct in thinking that transport infrastructure is vital to the long-term economic situation of a nation?

Now that is purely a political decision - at the moment, HMG wants the user to pay 75% of the running costs, hence the increase in fares etc.
I'm not sure political debate is for this forum? We could argue fors & against until the train arrives....

[bemmy]

Don't you think that the rest of Europe might possibly be correct in thinking that transport infrastructure is vital to the long-term economic situation of a nation?

Now that is purely a political decision - at the moment, HMG wants the user to pay 75% of the running costs, hence the increase in fares etc.
I'm not sure political debate is for this forum? We could argue fors & against until the train arrives....

The railways have been a political football since 1830 -- how can we discuss them without being political?

Anyway my point there was that once again we are out of step with Europe, believing we are right and everyone else is wrong. Of course, maybe sometimes we are right, but anyone who has been on a train in both the UK^▸ (United Kingdom) and on continental Europe must realise that we're getting something wrong, even though as you say the reasons are debatable.

[paul7575]

Why can't the TOC^▸ (Train Operating Company)'s buy the rolling stock? They are all substantial enterprises with plenty of capital behind them, surely the only reason they don't buy trains is because the franchises are too short. I think Rhydgaled's proposal is pretty sound in principle -- if you could take out the substantial profit element enjoyed by the ROSCO^» (Rolling Stock Owning Company - about)'s, the savings could be used for the benefit of the railways.

And so it came to pass, that about 4 or 5 years ago the Labour government set the competition commission onto the big bad profiteering Roscos, and after much detailed analysis (available online if I could be bothered to look for it) they reported back that the Roscos didn't actually make a substantial profit after all, and the main problem with the rolling stock market was that it was too tightly controlled by the DfT^» (Department for Transport - about)...

Paul

[bemmy]

Why can't the TOC^▸ (Train Operating Company)'s buy the rolling stock? They are all substantial enterprises with plenty of capital behind them, surely the only reason they don't buy trains is because the franchises are too short. I think Rhydgaled's proposal is pretty sound in principle -- if you could take out the substantial profit element enjoyed by the ROSCO^» (Rolling Stock Owning Company - about)'s, the savings could be used for the benefit of the railways.

And so it came to pass, that about 4 or 5 years ago the Labour government set the competition commission onto the big bad profiteering Roscos, and after much detailed analysis (available online if I could be bothered to look for it) they reported back that the Roscos didn't actually make a substantial profit after all, and the main problem with the rolling stock market was that it was too tightly controlled by the DfT^» (Department for Transport - about)...

Paul

Well, assuming that the commission's findings are correct, then allegations that the ROSCOs are profiteering are incorrect. And indeed control by the DfT is clearly stifling TOC's ability to get new stock. However the ROSCOs still require a profit -- understandably -- which is why it would be cheaper for the TOCs if they could cut out the middleman and own the rolling stock. On top of that the TOCs would have an interest in maintaining the value of their assets, not to mention trying to procure durable trains in the first place that will retain their value better. Not that I am accusing any TOCs of failing to maintain the trains they lease to the highest standard, of course.   

[SDS]

Lloyds exited from the consortium owning Porterbrook on 15th October 2010.

http://www.porterbrook.com/pages/shareholders.html

Angel Trains sold by RBS in 2008 to a consortium advised by Babcock & Brown.

http://www.angeltrains.co.uk/corporate/shareholder.aspx

Alpha Trains has nothing to do with UK^▸ (United Kingdom) rolling stock.

Ta for update.